As Dodd-Frank Repeal Looms, Shareholders Gird for Annual Meetings

Investors will keep prodding companies to bring their executive pay in line with rivals’ and disclose more detail about their environmental and social policies during this year’s shareholder contests.

Their push continues trends in corporate governance, despite a murky regulatory outlook that could change disclosure rules after this year, according to a new report.

“There’s a lot of uncertainty, but governance has advanced. I don’t think we’re going to roll back the clock on such things as say-on-pay,” said Chuck Callan, senior vice president for regulatory affairs at Broadridge Financial Solutions, who co-authored the report with vice president Sharyn Bilenker.

Broadridge, which mails annual meeting information and voting ballots to the majority of shareholders in the U.S., issued an annual meeting outlook with the corporate governance arm of PricewaterhouseCoopers LLP, the accounting firm, on Thursday.

Most large companies hold their annual meetings in the spring, sometimes engaging in closely watched proxy battles, during which shareholders vote on contested matters such as corporate pay practices, board composition, and environmental policies.

The meetings have already begun. The Walt Disney held its annual meeting on Wednesday, March 8, and shareholders voted on proposals requiring the company to make annual reports on its lobbying activities and increase the percentage of board directors that shareholders can nominate.

This year’s meetings will allow shareholders to spotlight director performance. Broadridge noted that governance advisors Institutional Shareholder Services and Glass, Lewis & Co., whose opinions carry weight with many institutional investors, are set to recommend votes against many directors who serve on more than five boards, arguing that many of them are “overboarded.”

There are 44 directors who sit on at least six boards of S&P 1500 companies, according to Broadridge’s data unit.

Large investors like Blackrock will continue to push boards to craft strategies to emphasize long-term investments over shareholder buybacks, said the report.

Other investors have already signaled they will use their clout to encourage more diversity. Index-fund giant State Street Global Advisors said this week it will begin pushing large companies to put more women on their boards, for example.

This year could also be notable as the last before a Republican-led Congress and Donald Trump’s presidential administration repeal parts of the Dodd-Frank law of 2010, which contained many corporate disclosure rules.

Companies may not be required to disclose how much chief executives are paid relative to the median employee, or reveal whether their supply chains contain certain minerals linked to violence in the Democratic Republic of the Congo or its neighbors.

Still, shareholders in recent years have supported “substantive disclosure” on corporate efforts to promote social and environmental policies, the report said. Their demands for more detail on those issues could continue, regardless of what happens in Washington, according to Broadridge.

Along with the now-standard say-on-pay votes, many companies plan to ask their owners to revisit how often they vote on compensation. The so-called say-when-on-pay votes, which need to occur at least once every six years, could determine whether companies hold the pay votes annually, biannually, or every three years.

But it’s unlikely that any will be able to take back pay voting entirely, even if the Dodd-Frank rule is struck down, said Mr. Callan.

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